Justice Department Responds to Public Comment on ABI-SABMiller Merger

(January 13, 2017)  The Justice Department has responded to public comments filed by 12 parties (including NBWA) on the Justice Department’s Proposed Final Judgment (PFJ).  The PFJ and Consent Order was finalized between the Justice Department, SABMiller and ABInBev in July, 2016. In the response, the DOJ did not modify the PFJ and will soon move to ask Judge Sullivan to sign the final order for this case.

I previously summarized key provisions of the PFJ at this link. The 12 parties noted many varied areas where the PFJ was potentially confusing or did not go far enough. The DOJ had two forms of responses to these questions; 1) the PFJ already covers the question or 2) the request is outside the scope of the DOJ Complaint and Competitive Impact Statement. That being said, the confusion raised by the 12 parties and the deflection of answering several of these practical questions will significantly raise the importance of the Monitoring Trustee’s role in enforcing this PFJ.

To me the DOJ response under these Tunney Act proceedings was confirmation about the size of the wall they erected in the PFJ. The DOJ confirmed that the wall is indeed 30 feet, not 25 but they will not raise to 35 feet either as they feel their original settlement suffices to cover all concerns or that the other issues raised by the parties are outside their jurisdiction under the Complaint.

At this point, it is unknown if the Court will hold a hearing before entertaining a request to sign the final order.

(July 21, 2016 Update)

The required notice under the Tunney Act for comment on the proposed consent order has been published in the Federal Register.  The Justice Department will receive comments for 60 days.  The notice can be found here.

(earlier)    Justice Department Clears ABInBev Purchase of SABMiller With Conditions

The Department of Justice announced that it has approved the ABInBev purchase of SABMiller in the United States. The DOJ’s press release, Proposed Consent Order, and Competitive Impact Statement can be found here.

The DOJ approved the proposal by ABInBev to sell the SABMiller interest in the MillerCoors Joint Venture to Molson Coors and also added several additional conditions to ensure independence in the beer distribution industry. These provisions include restrictions on ABI, such as:

  • Acquiring a distributor if the acquisition would cause more than 10% of ABI’ s beer in the United States to be sold through ABI-owned distributors;
  • Prohibiting or impeding a distributor that sells ABI’ s beer from using its best efforts to sell, market, advertise, promote, or secure retail placement for rivals’ beers, including the beers of high-end brewers;
  • Providing incentives or rewards to a distributor who sells ABI’ s beer based on the
    percentage of ABI beer the distributor sells as compared to the distributor’s sales of the beers of ABI’s rivals;
  • Conditioning any agreement or program with a distributor that sells ABI’ s beer on the fact that it sells ABI’s rivals’ beer outside of the geographic area in which it sells ABI’s beer;
  • Exercising its rights over distributor management and ownership based on a
    distributor’s sales of ABI’s rivals’ beers;
  • Requiring a distributor to report financial information associated with the sale of ABI’s rivals’ beers;
  • Requiring that a distributor who sells ABI’ s beer offer its sales force the same
    incentives for selling ABI’ s beer when the distributor promotes the beers of ABI’s rivals with sales incentives.

 

The Consent Order contains additional provisions to ensure that Molson Coors is a robust competitor to ABInBev in the United States including provisions to facilitate Molson Coors effort to compete with ABI and ensure independent production of the current Miller brands for the US marketplace.

I will seek to provide additional perspective in the coming days after a more thorough review.

News coverage of the announcement can be found here and here.

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